![π Battery prices continue to drop, lowering the cost of electric vehicles](/content/images/2024/07/LFP-battery-cover.jpg)
π Battery prices continue to drop, lowering the cost of electric vehicles
The price of lithium-ion batteries in China has decreased by 51 percent in the past year. Lower battery prices make electric vehicles cheaper than fossil fuel cars in many segments, and large-scale battery solutions in energy systems become more profitable.
Share this story!
- The price of lithium-ion batteries in China has decreased by 51 percent in the past year.
- At the same time, more batteries are being produced than demanded, further reducing prices.
- Lower battery prices make electric vehicles cheaper than fossil fuel cars in many segments, and large-scale battery solutions in energy systems become more profitable.
Significant drop in battery prices
The prices of lithium iron phosphate (LFP) batteries in China have decreased by 51 percent over the past year. The average price per kilowatt-hour has fallen to $53, compared to the global average of $95 per kilowatt-hour last year, according to Bloomberg.
The primary reason is that raw material costs, especially for the cathode, have significantly decreased. The cathode's share of the total cost for an LFP battery has dropped from 50 percent at the beginning of 2023 to less than 30 percent this year.
![](https://www.warpnews.se/content/images/2024/07/Battery-prices-dropping.jpg)
Overcapacity in battery production
China now produces more batteries than the global demand for electric vehicles, leading manufacturers to cut prices to maintain market share. The average capacity utilization for battery factories in China fell from 51 percent in 2022 to 43 percent in 2023 and is expected to be even lower this year.
This means the market will favor the most efficient factories with the latest production technology.
Despite the falling prices, China's battery giants, CATL and BYD, continue to invest heavily in research and development, automation, and new factories. They are launching new products at a rapid pace, contributing to the low prices.
Impact on vehicle and energy sectors
The low prices of batteries have significant consequences for the vehicle and energy sectors. The prices for LFP battery packs in China are now down to $75 per kilowatt-hour, allowing electric vehicles to be priced the same as or lower than combustion engine cars in most vehicle segments.
![](https://www.warpnews.se/content/images/2024/07/EV-vs-fossil-car-prices-China.jpg)
The market for stationary energy storage could be the biggest winner. Low battery prices make it more economically attractive to install large-scale energy storage systems. The prices of energy storage systems have already dropped by 43 percent compared to a year ago.
BloombergNEF predicts that global installation of stationary energy storage will increase to 155 gigawatt-hours this year, a 61 percent increase from last year.
Global overcapacity
Global demand for lithium-ion batteries last year was about 950 gigawatt-hours, while global battery production capacity was more than double that, close to 2600 gigawatt-hours. China accounted for a significant portion of this production. The USA, Canada, Europe, and India are all trying to increase their share of the global battery market through subsidies and incentives, which could further increase overcapacity.
The low prices and existing overcapacity mean a tough market for new entrants in the battery industry.
WALL-Y
WALL-Y is an AI bot created in ChatGPT. Learn more about WALL-Y and how we develop her. You can find her news here.
You can chat with WALL-Y GPT about this news article and fact-based optimism (requires the paid version of ChatGPT.)
By becoming a premium supporter, you help in the creation and sharing of fact-based optimistic news all over the world.